Bill could slow Florida craft beer industry growth

SANTA ROSA BEACH – The fight between craft brewers and the distributors of Budweiser over the legalization of half-gallon beer containers has gotten so bitter that it is even being likened to extortion.

The issue seems simple enough: Florida allows breweries to fill quart and gallon containers – called growlers – at their tap rooms, but the half-gallon size that’s the industry standard in 47 other states remains illegal. Brewers, their customers and some lawmakers think the state should just get rid of the restriction that many call silly. But the politically powerful Anheuser-Busch InBev distributors have a powerful ally in Senate President Don Gaetz as they try to force craft breweries to give up some of their profit.

The latest idea is to force breweries to buy their own beer from distributors at a markup before they can sell cans and bottles to brewery visitors – the beer, in most cases, wouldn’t even leave the premises or be handled by the distributors. Now, the brewers don’t have to use a middleman.

“It’s like paying protection money” to the mob, said Sen. Jack Latvala, R-Clearwater, who supports allowing half-gallon growlers with no strings attached.

Gaetz has in recent weeks been playing both sides – telling beer lovers who have complained about the proposed legislation that he helped a craft brewery in his district get started, but is still supporting the bill (SB 1714) that takes profits from craft brewers and hands them to distributors. The bill will likely be considered before the session closes May 2.

“When he says that he supports Grayton Beer Company or he supports small independent breweries – he has never supported me in one thing,” said Jamey Price, the brewery owner Gaetz has boasted about helping. “He’s either evil or he’s dumb.”

Price’s brewery opened under a business plan that included sales through distributors to restaurants and stores, a tasting room where brewery visitors can buy draft beer and take-home containers, and a small production brew pub that would be supplemented by beer made at the main brewery.

“We can crumple that business plan up and throw it out the window,” said Price, standing at his Santa Rosa Beach brewery. “If this was in effect in 2010, more than likely we wouldn’t have gotten into this business.”

Anheuser-Busch InBev distributors, who handle Budweiser, are trying to protect the three-tier system of alcohol distribution the federal government set up after Prohibition ended in the 1930s. It basically ensures that alcoholic beverages are passed through a distributor to get to retailers. Exceptions have been made for purchases where products are produced, like buying wine at a winery or rum at a distillery.

MillerCoors distributors do support legalizing half-gallon growlers with no strings attached. Other regulatory concerns should be addressed separately, said Eric Criss, their lobbyist.

Another change the bill makes would force brewers to sell their beer to distributors and buy it back at a markup if they want to sell it at another location. That means a company like Cigar City Brewing in Tampa would no longer be able to directly transport beer from its main brewery to a separate brew pub that has a smaller brewing capacity.

Cigar City Brewing, which Joey Redner started with two employees in 2009, has grown to 115 employees, including the brew pub. Redner says he wouldn’t have succeeded without a tap room, where customers buy draft beer and take-home containers.

Small startup breweries can’t make a profit just based on sales through distributors, said Redner. For at least two years Cigar City was spending more to make beer than distributors were paying for it.

“Every time I sent a case out the door, I lost money. It was offset by the fact that I could sell that beer in draft on premise and in six-packs on premise at a higher margin than to a distributor,” he said.

Craft brewing is one of Florida’s fastest growing industries. There were six craft breweries in 2007 and there will be nearly 80 by the end of this year.

“We’re supposed to be about jobs and economic development,” Latvala said, adding that distributors are making money off the growth. “They’re just being greedy.”